This week in a packed LA Auto Show presentation room, the crowd hooped and hollered when Rivian’s electric pickup and SUV pulled on stage for their big debut.
In the crowd was Robert Bollinger, whose Detroit-based company Bollinger Motors is launching an EV pickup too. On paper that makes him a competitor, but Bollinger doesn’t see it that way. He suggests they’re more like allies in an EV revolution that needs more automakers of all stripes so that the supply chain can grow. He called Rivian’s debut “a great presentation.”
“We’re just worried about getting our own trucks into production, which is hard enough. Anyone who’s developing any kind of technology in the EV world is going to help,” Bollinger said. “The more companies that are making vehicles, the more companies there will be supplying them (components). And then prices go down for everybody. So it’s definitely a win-win-win to have as many people working on EVs as possible.”
Experts tell GLT they don’t see the EV market as a zero-sum game, that there’s enough future demand that more entrants are needed. But in that equation, there is one big variable: How quickly will big, legacy automakers launch their own EVs, and what will that mean for the Rivians?
Either way, Rivian has advantages and disadvantages. More on those later.
Electric vehicles remain a small part of U.S. auto sales—around 1 percent as of last year—but that’s expected to rise rapidly. Navigant Research projects that the plug-in electric market could be over 2.7 times larger in 2020 compared to the market size in 2017. Navigant says plug-in electrics will likely become the leading global road transportation technology by 2050.
Electric Vehicles - Market Share
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Bollinger said established automakers have been slow to respond to Tesla, which many credit for popularizing EVs and making them “cool.”
“They’ve had 10 years now to try and do something in that realm, and they’re just going so slowly. It’s going to be another 10 years before you have a significant percentage of EV sales,” he said.
Bollinger said he’s aiming at a different consumer than Rivian. Bollinger’s targets are off-road enthusiasts who care about the environment and are hands-on with their stuff.
Who Is The Competition?
EVs were everywhere at the LA Auto Show, including some in the same vicinity—if not exactly the same space—as Rivian. Highlights included:
- Byton’s M-Byte crossover SUV, with a giant 49-inch dashboard screen. It’ll start at $45,000 and be available in 2020. It shares 65 percent of the same components as its companion sedan (the K-Byte). Byton is a Chinese company with a home base in Silicon Valley.
- Kia will launch two electric crossover SUVs next year: the Niro EV and the Soul EV. The Niro will start around $30,000 after tax credits, with 239 miles of range and 200 horsepower. “This just might be the world’s most cost effective fully electric SUV,” said Kia Vice President of Sales Bill Peffer.
- Tesla’s Model X, an SUV that is already on the market, starting at $84,000 before incentives. It seats seven, just like Rivian’s SUV. It offers 295 miles on a single charge, going zero to 60 in just 2.9 seconds.
- The Audi e-tron SUV will hit the market in 2019. It’s Audi’s first EV, starting at $74,800. The e-tron is “a testament to our brand’s commitment to premium electrification,” said Audi of America President Mark Del Rosso. He said 30 percent of Audi’s sales volume would be EVs by 2025.
That’s just on the SUV side. Tesla founder Elon Musk has said they’re working on a pickup too, though the timing is vague. Ohio-based Workhorse is launching its W-15 EV pickup, but it’s aimed at commercial and fleet use, not the “adventure” consumers that Rivian is targeting.
Will Detroit Respond?
SUVs and trucks now make up two-thirds of the U.S. market, and big automakers are moving away from smaller cars. That was part of the reason behind GM’s announcement this week that it would cut up to 14,000 jobs and possibly close five plants, part of a major restructuring that will prioritize the company's electric and autonomous vehicle programs.
Detroit is known for making pickups. Why hasn’t it made an electric one yet?
“Because it doesn’t make money. The big guys know how expensive it is, and they’re pretty much waiting until batteries and other components are further along and cheaper so it makes sense. The big guys really don’t want to do it, and they say that out loud,” Bollinger said.
That’s true. GM’s leadership recently said they don’t have any plans for electric pickups.
“Some people who weren’t paying attention at (Rivian’s) launch said, ‘Oh, this is the electric alternative to the F-150.’ This is not that,” said Jim Womack, an early advisor to Rivian founder and CEO RJ Scaringe and a leading voice on lean business principles.
“This is a different kind of vehicle that nobody has seen before, that has a totally different set of attributes. And it’s not envisioned as a 2-million unit per year product. RJ has no interest in that because he doesn’t believe there are 2 million people who want the same thing,” he said.
It’s a scary time for big automakers, said Scott Burnell, global lead for business development and partner management at Ford. A good scary, he said.
“The reality, for us and for any other company that has a scale of 200,000 employees, is it’s not easy to turn that ship,” said Burnell, who helps Ford vet potential partners, including startups.
In Tesla’s Shadow
Given its lead position in the market, comparisons to Tesla are common for any EV startup—and Rivian is no exception. “The Elon Musk of electric pickup trucks?” read the headline of a story this week in the Los Angeles Times about Scaringe.
“Of course Tesla has done an incredible job of making electric cars cool,” Scaringe said. “They took the untruth that electric cars are boring and slow and flipped that. But they’re focused on a different space than we are. And it’s a great company. We feel the world needs multiple, many different avenues to build vehicles. It’s not just one flavor, and that’s of course what we’re working toward.”
One of Tesla’s biggest advantages is arguably Elon Musk himself—a spotlight-seeking showman. Could the same be true for Scaringe, the 35-year-old car nut with the Ph.D. from MIT in mechanical engineering?
“A lot of Tesla is the cult of Elon and his personality,” said Chelsea Sexton, an EV industry watcher based in LA. “Not unlike Steve Jobs at Apple. And RJ is not that. But on one hand, as long as the story gets told, there is ample room for humility in our space.
“EVs and auto industry in general is overcome with arrogance, so it’s actually a little bit refreshing to not have somebody walk out on stage and say, ‘I’m the best thing since sliced bread’ and overpromise on their vehicle,” she said, referring to Scaringe. “I think it’s OK that he’s not that personality. And to some degree, there can only be one Elon.”
Womack, the Rivian advisor, also noted Scaringe’s humility.
“He’s a real contrast to the kind of predominant model of entrepreneur, which is this very hard-charging kind of guy who’s gonna do what it takes to be a billionaire. I’ve known RJ for 10 years. And he’s never talked about making money. It’s never come up,” he said.
Going It Alone
Rivian’s products—a luxury SUV and pickup—are unique. Also unique is that Rivian will mostly build them in-house, without outsourcing big things to outside firms.
It’s building its own battery packs (but buying the cells). It has its own manufacturing plant in Normal. Its staff in San Jose, Calif., is doing the self-driving technology and data.
That’s in contrast to the collaborative approach taken by other companies. GM and Honda, for example, announced a partnership last summer to develop next-gen batteries together.
And what about startups?
“The reality of what it takes to launch a product in the automotive industry, and all the barriers and the requirements and specs you have to meet, you can only do it with a Tier 1 partner,” said Ian Simmons, vice president for business development, corporate engineering and R&D for Magna International, a massive Tier 1 auto supplier based in Canada.
“It’s almost impossible to get there on your own,” Simmons said.
Rivian isn’t going it completely alone. Its largest shareholder is Abdul Latif Jameel, a Saudi-based auto distributor with ties to Toyota. Another investor is the Sumitomo Corp. of Americas, a Japanese company that sources, logistics, and installs product equipment for automakers.
And Scaringe said partnerships could also go the other direction. Rivian’s vehicles are built on a common “skateboard” (which houses the battery packs), and Scaringe said that platform and related battery technology could be sold to other businesses. They might put a different “upper” (or vehicle body) on top of the skateboard, opening up a new revenue stream for Rivian, he said.
“This is something we’re not talking about publicly yet, but there’s a lot of activity,” he said.
We’re LIVE from @Rivian’s display at the #LAAutoShow. Let’s take a look around. https://t.co/4S7khoLksY
— WGLT (@WGLTNews) November 28, 2018
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